Over the last several years, Temple University’s Fox School of Business has partnered with investment management firm Vanguard to host an annual ETF trading challenge for students. Participants are given the opportunity to simulate real-world trading scenarios and compete against their peers in a mock trading environment.
ETF’s (otherwise known as exchange-traded funds) function as an umbrella investment option, containing assets such as stocks, bonds, and other commodities. Unlike a mutual fund, which is traded at the end of an investing day, ETFs can be traded throughout the day, which presents unique opportunities for investors to capitalize on.
“We decided to host an ETF competition so that students will trade ETFs and present new ETF ideas to Vanguard,” says Bora Ozkan, an associate professor of finance at the Fox School. “Our goal is to introduce students to a learning experience.”
The challenge ran from Feb. 15 to April 9. During this time, 52 teams worked to manage a fictional fund of $1 million in order to maximize their returns.
Previously an internal Temple event, the competition was opened last year for international universities to participate.
“Now we can have students from all over the world,” says Ozkan. “Moving forward we are hoping to have more participation.”
Of the competing teams, only four were selected to give presentations and defend their portfolios during the final event on April 16, 2021.
The panel of judges for the concluding event consisted of investment professionals from Vanguard, the CFA Institute and the investment education platform StockTrak.
The finalist teams represented students from Temple University, University of Ottawa, Arizona State and the University of Georgia.
The teams were judged by several criteria including the commercial viability of their investment plans, their ability to produce returns on their investments and the soundness of their elevator pitches.
“It’s important to trust the team if you’re going to place your money with them,” says Chris Baniewicz, one of the Vanguard representatives on the judge’s panel.
This year’s winning team came from the University of Georgia, consisting of students Bailey Gay, Jacob Rowell, Zack Burnett and Justin Wheat. The team chose to take an active investing strategy, making investment decisions by following current events and buying into dips in the market. They chose to balance high risk stocks like tech-disruptors Tesla and Coinbase against low risk “blue chip” stocks such as Microsoft and Coca Cola.
“We understood that we weren’t going to make massive gains by being in a single index,” Gay says. “What we decided to do was diversify between five or six funds that we expected to outperform the market.”
At the conclusion of the competition, their team’s strategy resulted in the highest return on investments.
“It shows that something like that in theory can produce the return we’re looking for,” says Gay.